For readers who remember the saga of cryptocurrency company Celsius, here’s an update:
The Israeli cryptocurrency company Celsius has filed for bankruptcy, becoming the latest casualty in the worldwide cryptocurrency crash.
The New Jersey-based, Israeli-founded firm filed for bankruptcy in New York City [July 14]. Celsius said in a statement that the decision will “provide the Company with the best opportunity to stabilize the business (and) consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”
Celsius filed for Chapter 11 bankruptcy, which allows firms to remain in operation while restricting their debt. …
Writing for the Israeli business news outlet Globes, Eti Aflalo said that Celsius used customer deposits to borrow for non-liquid investments, and that this became a problem when people wanted their money back during the recent crypto crash.
“Celsius’ big problem is that it has leveraged customers’ deposits and put it in various non-liquid investments, and so a month ago when customers began demanding their money, in the equivalent of a ‘run on the bank’ there was not enough available capital to repay all their money,” wrote Aflalo. [AL-Monitor]
Yet …
One employee of a cryptocurrency fund in Israel, who wished to remain anonymous, said that Celsius’ bankruptcy is not representative of the country’s crypto scene.
“I don’t think it’s representative of how Israel is viewed as there are many quality crypto companies and pioneers of the space here,” he told Al-Monitor. “There is a level of respect in general for Israeli tech.”
First ripple of a tsunami, or just a standard result for any industry? Time will tell.
